Official development assistance (ODA) to developing countries increased
steadily during the 1970s and 1980s. The end of the Cold War led to a
significant decline in global ODA over the first half of the 1990s, after
which it returned to its pre-1991 upward trend. Recent Group of Eight
commitments to double aid to Africa suggest that this upward trend will
continue. While almost three-fourths of ODA during 1970–2003 was
provided through bilateral programs, the proportion channeled through
multilateral organizations has increased since the 1980s. Private aid
has displayed a more steady trend, growing slowly over the past three
decades to around 11 percent, although the official data are almost certainly
understated.

Nearly two-thirds of ODA goes to least developed and low-income countries (those with
a 2004 gross national income (GNI) per capita of less than $825). Another
third goes to lower middle-income countries such as Algeria, Brazil,
China, and Thailand (those with a GNI per capita of less than $3,255),
whose populations contain substantial numbers of poor people. About 3 percent is allocated to upper middle-income countries such as Argentina and Chile. Over a third of world aid goes to sub-Saharan
Africa, but in per capita terms, this still amounted to less than $35
per African in 2003.

Larger countries tend to receive more aid, but smaller amounts of aid
per capita. India and China are among the top aid recipients, but are
at the bottom in terms of per capita aid disbursements. Small island economies
like São Tomé and Príncipe get relatively small amounts
of aid, but this translates to around $225 per head, compared with less
than $2 per head for India or Nigeria. This trend is not without exception,
however: Mozambique receives high amounts of aid ($1.2 billion a year
on average over 2000–03), as well as relatively high aid per capita
($67); while Turkmenistan gets little on both fronts ($43 million a year
on average over the same period, or $9 per head).

The major bilateral donors, coordinated through the OECD's Development
Assistance Committee (DAC), comprise the United States, Japan, and Western
Europe. France, Germany, and Japan have reduced their contributions in
recent years, while the Scandinavian countries, the United Kingdom and,
more recently, the United States have increased theirs. Denmark, Norway,
the Netherlands, Sweden, and Luxembourg contribute well above the long-standing
UN goal of 0.7 percent of GNI for development assistance. Italy, the United
States, Greece, and Japan contribute the smallest shares of their GNI—all
below 0.25 percent.

For most of the 1990s, around 40 percent of all aid went to the development
of economic infrastructure and productive sectors (agriculture, industry,
and trade). In recent years, greater emphasis has been given to social
sectors (health, education, water supply/sanitation, and strengthening
institutions and civil society). Social infrastructure and services accounted
for almost one-third of aid in 2003, up from 20 percent in 1990.

Aid has been associated with high growth in some countries, but not in
others. Some recent studies find a positive relationship between aid and
growth, and there is evidence that aid targeted at infrastructure, productive
sectors, and budget and balance of payments support can help stimulate
growth relatively quickly. Other research has found either no overall
relationship, or a conditional relationship in which aid effectiveness
depends on strong policies or institutions.

Prepared by Bilal Siddiqi,
Research Assistant, Center for Global Development, Washington, D.C.
Unless otherwise indicated, the source for all charts is the OECD
Development Assistance Committee database.